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Tipping Point for AWS? What SMBs Can Learn from Dropbox’s Move from the Amazon Cloud

A cautionary tale has emerged in the realm of Amazon’s cloud services, and it is filled with the consequence of technology choice versus business benefits. This is a lesson that all start-ups, SMBs, and mid-sized enterprises should heed and learn from. Online storage provider Dropbox has confirmed that it is pulling up its stakes that had been firmly set in the AWS environment, and leaving AWS. Each day, Dropbox has served nearly half of a billion users around the world with access to file storage on the internet across all types of devices. To date, the company had utilized AWS as the platform of choice for their services. We now have learned that for the last two and a half years, the company has been developing its own internally built storage system that has been named “Magic Pocket” that is designed to run on its own infrastructure, and not AWS.

Approximately 90 percent of the files that Dropbox hosts for their customers have already made the migration to their new platform hosted in their own data center. It is important to note that a critical tactical element in the development of this platform was the economic advantage over AWS storage costs, a fact that is openly shared by Dropbox.

About that Economic Purpose
Over the years, some enterprises have gravitated towards massive cloud providers like AWS for their cloud needs. It is very easy to implement and start down their cloud journey with AWS; but just as fast food is convenient while coming at a price, the pain of scale, the importance of business needs, and the need to innovate have taken several notable companies to the brink of leaving for other solutions.

Here is what Akhil Gupta, from Dropbox said about the move:

“As the needs of our users and customers kept growing, we decided to invest seriously in building our own in-house storage system. There were a couple reasons behind this decision. First, one of our key product differentiators is performance. Bringing storage in-house allows us to customize the entire stack end-to-end and improve performance for our particular use case. Second, as one of the world’s leading providers of cloud services, our use case for block storage is unique. We can leverage our scale and particular use case to customize both the hardware and software, and provide better unit economics.” – Akhil Gupta, Dropbox Vice President of Infrastructure at Dropbox

Like Dropbox, some have experimented with the strategy of building their own infrastructure. Online gaming company Zynga was a highly-visible example of this when they deployed their own hybrid cloud strategy back in 2011, only to come back to AWS quite recently. Sony is another example of a company that wanted more control, more stability, and more visibility into their infrastructure, thus leaving AWS back in 2012 for the greener pastures of OpenStack. Target, General Motors, CoolAsia, and other notable companies have at one point or another looked head on at the AWS “advantage” and realized that their needs were better suited to building their own.

Tipping Point?

“The name given to that one dramatic moment in an epidemic when everything can change all at once is the Tipping Point.”
– Malcolm Gladwell, Author of “The Tipping Point: How Little Things Can Make a Big Difference”

Just as predicted in February 2014, in my post about the migration of Start-Ups from AWS, we may be approaching that tipping point now at a faster rate. The specific advantages of building in-house data infrastructure systems, or relying on a hosting provider, combined with the commoditization of cutting edge technologies, and the soaring costs of AWS services mean that more companies are likely to journey down this internalization track or hosting track. Some organizations have simply reached a point at which the advantages far exceed the costs of internal efforts, in essence, a tipping point. In technology, the convergence of ideas, people, and context can form a discernible point in time where dramatic and rapid change can occur.

It remains to be seen if the general enterprise is at a tipping point that may shake AWS. For Dropbox and other companies that have started a journey towards breaking the AWS grip, things have changed.

AWS’s Lack of loyalty?Some media outlets have speculated that Dropbox, Apple, and others are abandoning AWS for competitive reasons. This may even be the case for products that have nothing to do with cloud hosting – like Apple TV or Google Chromecast, which compete with Amazon Fire TV. While this seemingly doesn’t bother Netflix, which continues to use AWS, companies with deeper technology roots have done their due diligence and chosen to leave AWS. What do you expect when AWS competes with its own customers? Dropbox WAS one of AWS biggest customers, yet AWS had the arrogance and decided to compete with them with Zocalo. I am sure this was a factor in Dropbox’s decision. Dropbox is not alone. Netflix has to now compete with Amazon Prime Video, Spotify has to compete with Amazon Prime Music, and Samsung, LG, and other smartphone providers have to compete with Amazon’s Fire phone. Amazon wants to gobble all the market from underneath its customers that are paying Amazon’s bills.

Opportunity, Because One-Size-Fits-Some
Even if the risk of Amazon competing with you is low, building your own infrastructure flies in the face of long-standing IT convention. Perhaps as you read this, you might be considering what AWS is costing and what business advantages are being missed because of organizational needs. Not every company has the capital to deploy an entire datacenter, custom programming languages, and custom machines to run it all. Nor should you! Dropbox seized an opportunity that was presented because of technical acumen, lack of capital and operational budget constraints, and readily-available talent. It makes sense for businesses at their level, but there are risks if a company is not prepared to go to these lengths. Partnering with a hosting partner that has predictable costs, robust infrastructure, and strong reliability is a middle of the road, rational alternative to going with AWS.

The Strategy for Those Not Called Dropbox
For those companies that fall into the classifications of startups, SMBs, and mid-market companies, the clear risk and enormous costs of building a custom infrastructure is just not a reasonable technology strategy. However, your company has planned for, or has experienced the kind of growth and business needs that have caused a level of scrutiny against AWS. For its platform solution, your company has a number of needs:

Deep expert live support is required

Information systems require a comprehensive range of products

The service must be reliable

The service must be scalable

The service must provide control for security, audit, and tuning purposes

The service must be high performance

The service must present the utmost value

The service must present “predictable” costs

AWS might be competitive on a couple of these points, mainly scale and range of products. However, professional hosting companies can excel on all of them, especially ones that offer on-demand hybrid hosting platforms that enable the “mash-up” of traditional dedicated servers with cloud servers.

Value and Values
As for how Codero fits in this trend and movement, let me say that first and foremost, Codero prides itself on outstanding support, something that AWS cannot provide, even when AWS “Premium” support is purchased, you would be hard pressed to get the support you need from them. Secondly, Codero will not compete with its customers as Amazon repeatedly does. Finally, Codero’s Hybrid solutions are but one of the many technical options available for customers. Cloud Hosting, Managed Services, Dedicated Services and more are available to deliver the kind of customized experience that business truly require as they scale. These solutions also need to be at reasonable and predictable costs with no extra costs and expensive add-on options. Over the years, we have demonstrated that Dedicated Hosting is 3x less expensive than AWS. This range of services is a product of purposeful design, built with the intent of serving customers with needs that are as individual as the organizations themselves. Codero designed its hybrid platform as flexible, cost efficient, cost predictable, scalable, and unique with its patented on-demand features. Essentially, any business along the spectrum could select a specific service or any combination of Codero services and realize benefits that are not a part of the AWS proposition.

The REAL un-AWS Opportunity
These movements away from AWS come from true, deep-seated concerns that begin with cost, but go far beyond that with questions about support, control competitiveness, having the right platform that suits your company’s needs, and frankly, from knowing that you have a loyal and competent team behind you when problems arise (as they inevitably will). AWS is starting to show some chinks in its much-hyped armor. Companies like Dropbox are waking up to the opportunity that is presented by looking at the true value of what AWS provides, and weighing that against the costs and limitations of what they can get out of that platform. To the vast majority of businesses, going with an experienced hosting partner that provides superior products and excellent support, the choice to leave AWS behind is clear. We firmly believe companies of all types can enjoy a better solution that allows them to grow and meet their needs.